Third South Asia Region Public Procurement Conference ... · Procurement Conference Innovation for Sustainable Performance November 1-3, 2015 ... specifications, ... ICTAD/SBD/01

Department of Public Finance – General Treasury

Third South Asia Region Public

Procurement Conference

Innovation for Sustainable Performance

November 1-3, 2015

Dhaka, Bangladesh

P AlgamaDirector General

Department of Public Finance, Ministry of Finance, Sri Lanka


Sri Lanka Economy

Macro Economic Achievement - 20142005 2014

GDP at Market Prices (Rs. Bn.) 2,453 9,785

Per Capita GDP at Market Prices (US$) 1,241 3,625

Inflation - CCPI (%) (Annual Average) 11.0 3.3

Unemployment (%) 7.7 4.3

GDP (Percentage change) 6.2 7.4

Share of GDP (%)

Agriculture 12.5 10.1

Industry 28.1 32.3

Services 59.4 57.6

Government Finance

Total Revenue (Rs. Bn) 380 1,195

Total Expenditure and Lending (Rs. Bn) 592 1,796

Budget Deficit / GDP % -7.0 -6.0

Social Development 2005 2014

Growth of Population 1 0.9

Life Expectancy at Birth 68 74.3

Infant Mortality (Per 1,000 Live Births) 11 9.9

Maternal Mortality (Per 100,000 Live Births) 12 22.0

Literacy Rate Average (%) 91 92.5

Electricity to Households (%) 77 98.0

Pipe - borne Water (% of Population) 30 44.3


DEPARTMENT OF PUBLIC FINANCE

Focus;

Government Financial Regulations

Government Procurement Policies, Practices and

Guidelines

Government Asset Management Policies and Guidelines

Departmental Fees and Charges

Fund Management

Purpose;

For effective and efficient utilization of public financial

resources.

Promote good governance and assist the parliament

committees on Public Accounts.

DPF provides a range of regulatory and advisory services to

ensure better public financial management in the country


Government Procurement Strategy

Government Procurement Strategy is to create

necessary framework for the procurement of goods,

works, consultancy services and other services to

ensure value for money, open and effective

competition, ethics and fair dealing, transparency and

accountability in Public Procurement.


Key Functions of the DPF on

Procurement Management

Department of Public Finance (DPF) is the principal

authority for;

Develop, Implement and Review policies in procurement

of goods, works and services

Issuance of Procurement Guidelines, Manuals &

Standard Bidding Documents

Advise the Procuring Entities (Ministries / Departments)

on procurement activities

Simplification of Review and Approval Process of

procurement


Key Functions of the DPF on

Procurement Management Contd..

Review Procurement Procedures & Procurement Plans of

all Government Institutions

Monitor quality and progress of procurements

Appoint Procurement and Technical/Project Evaluation

Committees for procurements of higher values – (SCAPC,

CAPC, CANC, CACPC)

Formulate accreditation system on selection of members

for Procurement and Technical Committees

Conduct capacity building programs on Procurement

Issue clarification of the provisions of these Guidelines or

these documents


Principles govern Public Procurement

Value for money

Value for money is a key consideration for public procurement.Quantitative factors are tested by comparing the outputs and costsof proposals against a neutral benchmark.

Public Interest

Procuring decisions need to safeguard the public interest; andprotect the public interest right throughout the process in allprocurements ensuring that the procurement process is structured toensure that the project continues to be in the public interest.

Output Oriented

Projects should focus on the specification of what services are to bedelivered rather than how they should be delivered in order tomaximize the opportunity for innovation. Performance measuresshould be established to ensure that the required services aredelivered in accordance with the output specification.


Principles govern Public Procurement Contd..

Transparency

The procurement process ensure that the availability of information

on the use of government resources to Parliament, taxpayers and

other stakeholders. The need to disclosure of the processes and

outcomes is emphasized.

Accountability

Officials involved in Procurement process should be accountable for

the people, parliament, donors and civil society and other

stakeholders. The procurement transactions are recorded and

published all the data in relation to particular procurement.

Engaging the market

Procurement entities should encourage all suppliers to participate

in public procurement and should always engage in marketplace,

suppliers and other stakeholders.



Confidentiality

Parties associated with Procurement Actions, namely, suppliers/

contractors and officials shall ensure that they maintain strict

confidentiality throughout the process.

Free of Corruption

The officials involved in a Procurement Action shall not abuse their

powers. An official who abuses one’s position in a Procurement Action

to derive benefits for oneself or one’s close family or business

associates, would be deemed to be engaged in corrupt practices.



Free of Conflict of Interest

Officials shall declare that they shall remain without a conflict of

interest throughout the process. Should such a compromising

situation arise, the official shall declare his/her interest and

disassociate himself/herself from the process.

No gifts or inducement to be accepted

Officials shall refrain from receiving any personal gain from any

Procurement Action. No gifts or inducement shall be accepted.

Suppliers/contractors are liable to be disqualified from the bidding

process if found offering any gift or inducement which may have an

effect of influencing a decision or impairing the objectivity of an

official


Significance of Public Procurement in

Sri Lanka Economy

Public procurement remains a significant part of the Sri Lanka

economy, accounting for about Rs. 616bn or 24% of total

government spending and 6.3% of GDP disbursed through public

procurement process.

346 Procurement Committees were appointed for 43 government

agencies in 2014.

Government can reap benefits from improved management of their

public procurement systems.

More focused approach on Public Procurement Management within

this large internal market, greater value can be achieved in national

budgets while developing local industry.


Governing Policy

Government Procurement Guidelines

Government Procurement Guidelines – 2006 (Goods &

Works)

Guidelines on Government Tender Procedure – Part II

Private Sector Infrastructure Projects (BOO / BOT / BOOT

Projects)

Guidelines on Selection and Employment of Consultants

Guidelines for Procurement of Pharmaceuticals and

Medical Devices


Objectives of the Government

Procurement GuidelinesThe Procurement process should ensure;

a) maximizing economy, timeliness and quality in Procurement resulting in least cost together with the high quality;

b) adhering to prescribed standards, specifications, rules, regulations and good governance;

c) providing fair, equal and maximum opportunity for eligible interested parties to participate in Procurement;

d) expeditious execution of Works and delivery of Goods and Services;

e) compliance with local laws and regulations and international obligations;

f) ensuring transparency and consistency in the evaluation and selection procedure; and

g) retaining confidentiality of information provided by bidders


Types of Procurement Committees

SCAPC - Standing Cabinet Appointed Procurement Committee

CAPC - Cabinet Appointed Procurement Committee

CACPC - Cabinet Appointed Consultancy Procurement Committee

CANC - Cabinet Appointed Negotiating Committee

MPC - Ministry Procurement Committee

DPC - Department Procurement Committee

RPC - Regional Procurement Committee

PPC - Project Procurement Committee

TEC - Technical Evaluation Committee (to assist PC)

PC - Project Committee (to assist CANC)


Approving Authorities

RPC Head of the Department

PPC Chief Accounting Officer

DPC Accounting Officer

MPC Chief Accounting Officer

CAPC Cabinet of Ministers


Standard Bidding Documents

Expedite procurement process

Commonly used (share knowledge)

Tested documents (less trouble)

Benefits of standardization (comfortable living)

ICTAD/SBD/01 – Works - Medium contacts

ICTAD/SBD/02 – Works - Major contacts

ICTAD/SBD/03 – Works - Minor contacts

ICTAD/SBD/04 – Design & Build contacts


Procurement Planning

In order to draw market early attention to potential

procurement opportunities, each agency must publish

each year on respective websites an Annual

Procurement Plan and update regularly during the

financial year. (PF Circular no 1/2014)

This Annual Procurement Plan help facilitate public

procurement planning and resource management and

private sector also to get ready with supply and work

contracts of the government in the medium term


Master Procurement Plan

Mandatory requirements for both foreign funded projects and GOSL funded projects for better budgeting.

Procurement Plan specifies actions to be taken to reach a defined goals, resource requirements, appropriate procurement methods, prior review requirements of funding agencies, sequence of a staged procurement process.

Procurement Plan should be prepared once the funding arrangements are finalized. (Before the commencement of financial year)


National Procurement Commission

(NPC)

Parliament has approved 19th Amendment to the Constitution

which created NPC with regulatory responsibility on

procurement.

Required legal provisions and practices will be provided by

way of parliament act.

NPC will issue revised current procurement system, rules and

guidelines.

It is proposed to include e-GP in the draft GPGL-2015

As a dedicated authority it provides suppliers and vendors

with greater assurance and confidence in public procurement

through that would help enhance the confidence of vendors

and suppliers in participating in public procurement.


Proposed Central Procurement Authority to

deal with common goods and services

Buyer survey/Supplier Survey/interviews to gather

information. Likely suppliers for similar products

SMEs to Large scale enterprises

Market Readiness Review (capability and track records)

FAs for Products which takes a longer time for evaluation

(Pharmaceuticals)

Relevant Legislations and policy need to incorporate in the

procurement process.

FAs for Open competition, restricted, negotiated, sole

suppliers

Bidding documents should broad enough to allow some

flexibility for FA.


Proposed Central Procurement Authority to

deal with common goods and services Contd..

Benchmarking Value for Money offered by partnering-FAs and

Call offs.

Act on behalf of other public sector organisations in the role of

Central purchasing body.

Government agencies can access to the catalogues display

on computers provided by Suppliers.

Vendors are ready to deliver the goods directly to the buyers

and buyer pay directly to vendor.

For effective implementation of FA e-GP is essential.

Opportunity to select single/multiple vendors on agreed terms

and conditions in FA


Advantages of procuring common goods

and services through Central Procurement

Agency• Call tenders for WOG needs and awarded to single/multiple

vendors.

• Fair Price and (standard) quality advantage.

• Economies of scale advantage

• Common terms and conditions for similar vendors

• Large volume of supplies was distributed among vendors

• Team of experts handle procurements for whole of Government

saving time and manpower

• Facilitate Special procurement like medical equipment, fuel,

pharmaceuticals, handled by respective government agencies.

• Used the service of Crown Agents.


e-Procurement

Sri Lanka has not introduced a comprehensive e-Procurement

system yet.

Government is considering to introduce a commonly accepted

e-procurement system with necessary modifications for WOG

agencies to use.

USAID, WB and ADB has promised their support towards this

reform.

Currently PFD publishes Procurement Notices and EOIs of

procurements handled by leading government organisations

and planning to publish tender awards of major procurements

soon.


Initiative for Sustainable Procurement

Environmental Impact Assessment (EIA) and

Environmental and Socio Economic Impact

Assessment (EEIA) assessment is a pre requisite

for Mega projects and constructions.

Draft policy encouraging green procurement and

echo labelling is being developed with the

assistance of United Nation’s Environment

Program


Sri Lanka experience with PPP Projects

Under the BOI “Bureau of Infrastructure Investment” (BII) is

functioning as promoting, facilitating and coordinating agency for

servicing the line agencies under the supervision of Ministry of

Finance.

The final authority for selection and approval is with relevant line

Ministry and the Cabinet of Ministers.

Preliminary Screening:

Priority projects identified by the line ministries should submit

financial and technical viability reports prepared jointly by the Board

of Investment (BOI) and the line ministry to the Ministry of Finance.

Once the clearance from the Ministry of Finance is obtained, the line

ministry should present a Cabinet memorandum to Cabinet of

Ministers for approval.

All matters pertaining to BOO,BOT projects should be screened by

CANC assisted by a Project Committee. The approving authority

of these projects is the Cabinet of ministers.


Sri Lanka experience with PPP Projects Contd..

Government of Sri Lanka has implemented a few projects successfully under the PPP method. They are;

Power Plant at Embilipitiya (100MW)-US $59mn

Power Plant at Horana (20MW)-US$14mn

Power Plant at Matar a(20MW)-US$15mn

Power Plant at Kelanitissa (163MW)-US$105mn

Asia Power -Power Plant (51MW)-US 31mn

Colombo Power Plant (60MW) US-50mn

Heladhanavi Puttalam (100MW)-US60mn

Small Hydro Power Plant (95MW)-US82MN

Colombo Port South Breakwater

Colombo South Container Terminal Development


Colombo South Container Terminal

Development Government of Sri Lanka (GOSL) has launched the Colombo Port

Expansion Project (CPEP)”. to expansion of Port of Colombo to cater the

increasing demand of services in the international shipping industry. After

comprehensive studies the proposed development in South of Colombo

Port was identified as essential for economic development.

The proposed Colombo South Harbour is situated west to the existing port

of Colombo comprising an area of approximately 600 hectares. The

proposed harbor has 3 terminals each having 1,200m length and

facilities to accommodate 3 berths alongside

There are two phases of the project:

• Harbor Infrastructure works - Construction of Breakwaters, dredging

for new harbor basin and navigation channel and rerouting of crude oil

pipe line. This phase has been completed through open competitive

bidding process.

• Construction of Terminals and other related services. This Phase has

completed through PPP method.



Development Contd..

After evaluation of the Request for Proposals (RFP), being the first

terminal of the Colombo South Harbor, namely South Container

Terminal has been assigned to M/s. Colombo International

Container Terminals Limited under BOT basis.

Developer: Colombo International Container Terminals Limited

(CICT)

Colombo International Container Terminals Ltd., (CICT) is a joint

venture Company between China Merchants Holdings

(International) Co., Ltd. (CMHI), a listed blue chip Company in

the Hong Kong stock exchange, and the Sri Lanka Ports

Authority (SLPA). It is developing the 2.4 million twenty foot equal

units (TEUs) capacity for Colombo South Container Terminal in the

Port of Colombo, under a 35 year build, operate, and transfer

(BOT) agreement with the SLPA.



Development Contd..

The largest shareholder of this company is CMHI with 85%

ownership and the balance 15% being held by SLPA.

CICT commenced construction works of the terminal in December

2011. With an envisaged investment of US$ 500 million, including

the installation of the latest state of the art terminal equipment, it is

so far the single largest foreign direct investment in Sri Lanka

by a private entity.

The Port of Colombo with a current capacity of over 4.5 million TEUs

has embarked on a large infrastructure development programme to

increase the total capacity of the Port of Colombo by another 7.2

million TEUs in three separate phases.



Development Contd..Effective Date : 1st December 2011

Term of BOT Agreement: : 35 Years

Project Features:-

Quay Length : 1,200 m

No. of Berths : 3 - 4 berths

Capacity : 2.5 M TEU

Depth : 18m

Terminal Equipment for each terminal - 12 Nos. Super Post-Panamax quayside cranes

40 Nos. RTGs.

Construction Details:-

Date of Commencement : 16th December 2011

Project Completion : Phase I (600m Quay Length) - December 2013

Phase II (Entire Terminal) : April 2014

Estimated Cost : US$ 500 million

Consultant : AECOM of Hong Kong

Civil Contractor : China Harbour Enginnering Company Ltd.



Development Contd..



Development Contd..


Capacity Building on Public Procurement

PFD in partnership with “Miloda” Academy of Financial

Studies of Ministry of Finance on procurement training and

capacity development for public sector officials who involved

in public procurement.

PFD has conducted a series of training sessions for various

government organisations (defense sector and corporations

and statutory bodies).

New training program will be organised for senior public

sector officials in November 2015 at “Miloda” Academy.


Accreditation system for officials

involved in Public Procurement

A data base is being developed at PFD for officials with a

wide range of disciplines appointed for Procurement and

Technical/Project Evaluation committees.

Qualifications, skills and experience are recognised in

nominating these officials for various committees with a

maximum number of committees they can serve at any given

time being 3.


Procurement Monitoring

Procurement monitoring has not been

successful yet as a result of lack of timely

information and data.

A system is being developed to capture

these information by PFD

Increasing number of Agencies are

sending the information on timely basis

now


Q & A